JSW Steel upgraded to Buy by Prabhudas Lilladher, target Rs 1,377

what happened

Analysts at Prabhudas Lilladher, as reported by TradingView, highlight a strong operating quarter for JSW Steel in Q2 FY27. Consolidated volumes excluding BPSL rose 15% year on year to 7.46 million tonnes, while exports climbed 35%. Average consolidated realisation fell 3.6% from the previous quarter to INR 73,038 per tonne, weighed down by lower long-product prices. EBITDA per tonne reached INR 13,566, against the brokerage's estimate of INR 13,247.

The company kept its FY27 sales guidance at 28.6 million tonnes and reiterated its expectation of 7-9% domestic steel demand growth. The board approved an extra 5 million tonnes of capacity under Utkal Phase II and INR 1.48 trillion of planned capex over the next six years. Prabhudas Lilladher raised its rating to Buy from Accumulate and revised its target to INR 1,377 from INR 1,412, after the stock fell more than 12% from its recent peak.

why it matters

The main risk to margins is a further expected rise of 25 dollars per tonne in coking coal costs, which management links to raw material prices. Higher volumes and savings from the recently commissioned slurry pipeline should partly offset that increase. For India's metals sector, the story shows volumes and exports growing while input costs remain the key driver of profit.

market impact

JSW Steel and Indian steelmakers: higher volumes and exports support earnings, while pricier coal pressures margins

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